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Protection From the Perils of Aging

Choose the maximum daily benefit that the company will pay out per day. This ranges between $50 and $200, and premiums increase as the daily benefit escalates; however, you’ll want the maximum amount since costs of services will only increase as the years go by. You should also determine how the daily benefit is calculated – is it each day’s actual charges or a daily average calculated monthly? (Note that the latter is better in the case of home health care since home health aides may visit many times in one day but not at all on another.)

In choosing how long the company will pay for care, different decisions come into play. Some people will choose life-time coverage, the longest period available; quite expensive but nevertheless secure. Others will throw the dice and try to determine based on statistical evidence and family history what the best timeframe is likely to be. It’s a fact that the average nursing home stay lasts just under three years. Choosing a three-year coverage period would reduce your premiums significantly, but there’s obviously a gamble involved. Some say that those between 50 and 65 should opt for lifetime benefits with compound inflation options. Those 65 to 75 should consider a six-year or lifetime benefit with simple inflation options. And those older than 75 should consider purchasing the maximum daily benefit for as long a period as they can afford.

Understand the eligibility criteria! Participants become eligible for benefits on most long-term policies when help is needed with two or more activities of daily living, called ADLs. The ADLs are cooking, eating, bathing, dressing, toileting, maintaining continence, and mobility. It is wise to choose a policy where these ADLs are easily triggered. One of them should be bathing since an inability to bathe often means an inability to bend or move properly, and so multiple ADLs are affected when it becomes an issue. Know who determines eligibility. It is better if your personal physician can make this decision as opposed to one who is working for the insurance company.

Determine how soon payments will begin after you become eligible. The elimination period is the period of time, much like an insurance deductible before benefits kick in and when the payment has to come from your own personal resources. Choices are generally zero days, 30 days or 90 days.

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